Profit driven by lower provision; core operating profit growth weak
HDFC Bank's Sukhthankar says the cyclical factors for creation of non-performing loans may have played out, but some borrower-specific issues still remain. On the entry of small banks and payment banks, Sukhthankar says the market is large enough to accomodate additional players.
A total of 72 players had applied for the small finance bank licence.
In an interview to CNBC-TV18, he says the good part is that some of the irritants in the draft regulations have been removed from the final guidelines.
Under the new norms, payments banks can accept deposits and remittances but cannot provide loans.
The proposed Small Banks will provide a whole suite of basic banking products such as deposits and supply of credit, but in a limited area of operation.
The group said it wants to get into banking space as it would fill up the gap it has in terms of their product offerings.
Small banks will outperform and the larger banks may consolidate, says Gaurav Doshi, Morgan Stanley Private Wealth, India.